Effective Audit Committees

Equip yourself with the fundamentals needed for the Audit Committee

Audit Committees are expected to play a vital role in governance and in building trust in corporate reporting. Audit Committees therefore need members who have appropriate levels of expertise and knowledge of the industry and of the company.
This course will explore the fundamentals of the role of the Audit Committee and the nature and essential qualities of its members, particularly the Audit Committee Chairman. The course will cover the relationships with all key stakeholders and will examine all the key information flows and decision processes.

The course will be led by a governance and audit expert who has been involved with attending and presenting at Audit Committees for over 25 years. The course will equip participants with an understanding of the appropriate levels of knowledge and expertise and an awareness of the mechanisms and priorities for audit committees in today’s complex and highly regulated financial services world.

By attending this strategic four day course you will be able to:

• Understand the role and responsibilities of the Audit Committee and its relationship with the Board and the Board Risk Committee
• Consider what prudent and effective controls sit around the Audit Committee meeting process
• Understand the critical relationships with key stakeholders such as external audit, internal audit, the finance team and the company secretariat
• Understand the relationships with the various regulators and the complexities of group structures and overseas jurisdictions
• Recognise common areas that can cause problems
• Take away key actions and ideas to improve on Audit Committee performance

This course has been designed specifically for Audit Committee members and those directly involved in supporting and preparing information for Audit Committees.

This course will broaden the awareness of members of and advisers to Audit Committees and provide appropriate levels of oversight of financial reporting, audit quality, and other risks on the committee’s agenda.

It provides an opportunity for participants to update their knowledge and to explore the available mechanisms to deliver the effective Audit Committee support necessary in order to fulfil their roles.

This advanced four day course is a vital overview to the Audit Committee support practices and mechanisms that exist in listed companies, banks and other financial institutions. Practical guidance will be provided on such issues as:

• Being an Audit Committee member
• Best practice guidance on policies and procedures
• Governance, risk and compliance frameworks
• The relationship with the Board Risk Committee
• The relationship with External Audit, Internal Audit and Finance
• How to challenge Executive Directors, external Auditors and Chief Internal Auditors on their reports
• Dealing with regulators and other stakeholders
• Managing information flows
• Measuring the effectiveness of your Audit Committee

PLUS: The course will contain a variety of training activities that include:

• Practical presentations and lectures
• Group discussions
• Multiple case studies
• Audit Committee role plays

Agenda

Day 1

The Role and Responsibilities of Audit Committee Members

What does an Audit Committee Do?

• The role of the Audit Committee as delegated by the board, typical structure, membership, terms of reference and agenda items
• The role of advisors and the role of the Company Secretary
• The provision of information to the Audit Committee

Case study: Develop and prioritise a typical Audit Committee terms of reference

What are the Audit Committee Essentials?

• Oversight of financial reporting, audit quality, and other risks on the committee’s agenda
• Understanding the company, its culture and its dynamics
• Demonstrating sound industry knowledge and access to contacts
• Appropriate relationships with other board members, senior management, internal and external auditors
• Understanding current and emerging issues (e.g. cyber security, emerging technologies and social media)
• Understanding the full range of management information provided to the Audit Committee

Case study: Looking at the essential qualities of an Audit Committee member

### Day 2

Overview of the Relationships with Key Stakeholders

The Finance Team

• How to provide effective oversight and challenge to the annual report and accounts
• Dealing with the requirement for the annual report to be 'fair, balanced and understandable'
• Assessing the new strategic report
• Understanding the Committee’s role in reviewing regulatory returns

Case study: Understanding the structure of a typical report and accounts, including examples of good and poor annual reports

External Audit

• Roles and responsibilities for external auditors in relation to audit committees
• Assessing external auditor effectiveness
• Governance requirements and the latest guidance from the Financial Reporting Council (FRC)
• Retendering the external audit role and evaluating external audit pitches

Case study: Reviewing and evaluating an external audit proposal

Internal Audit

• Roles and responsibilities for internal auditors in relation to audit committees
• Governance requirements and the UK Financial Services guidance (the “FS Code”)
• Understand the guidance from the Basel Committee on Banking Supervision for assessing the effectiveness of the internal audit function in banks
• Understanding the internal audit universe and the annual risk-based internal audit planning process
• Internal Audit reports, gradings and links to the Board Risk Committee
• Evaluating internal audit effectiveness

Case study: Reviewing a typical internal audit report to an audit committee

Day 3

Audit Committee Activities

Membership and Attendance

• Guidance for nomination committees
• Independence and how this is defined
• Remuneration
• Who should attend and why
• Private meetings
• Importance of papers, minutes, actions and follow-up
• Practical strategies to build your network

Case study: Assessing some examples of good and poor Audit Committee minutes

Financial Reporting

• Annual report and accounts
• Strategic report and the relationship with the CRO and the board risk committee
• Results announcements
• AGM involvement

Guidance on what must be Included in the Audit Committee Report

• A summary of its role
• Members, their qualifications and meetings held
• Significant issues considered in relation to the financial statements
• How they assessed the external auditors’ appointment
• Tenure of the current auditors and time of last tender
• Contractual restrictions on auditor choice
• External audit fees and non-audit services

Case study: Reviewing examples of good practice Audit Committee reports

Complex Transactions

Members of committees in financial services companies should have sufficient relevant expertise to understand how complex transactions and financial instruments are recorded and valued

Whistleblowing

• Relationship with Compliance
• Damage limitation

Case study: Real life whistleblowing examples and outcomes

Guest speaker presentation: Assessing Audit Committee Effectiveness – Lessons from the Front Line Session presented by: Hanif Barma, Partner, Independent Audit Limited

Day 4

Audit Committee Effectiveness

• The Role of the Audit Committee Chair
• A balance between teamwork and challenge
• Working with company secretariat
• Setting the agenda and planning the work of the committee
• Time allocation
• Private meetings
• Informal meetings outside committee
• Relationships with the members of the executive management team
• Length of service
• Succession planning

Case study: Assessing some real life examples of challenging situations for audit committees

Annual Reviews of External and Internal Audit Effectiveness

• who performs them?
• Guidance for self-assessment
• Typical areas of concern

Annual Review of Audit Committee effectiveness

• Guidance re self-assessment
• When should there be an independent review
• Typical areas of concern

Case study: Real life findings from independent board and Audit Committee effectiveness reviews

Course summary and close